The economy's output gap is defined as the
A)difference between actual national income and desired aggregate expenditure.
B)result of economic growth.
C)difference between nominal GDP and real GDP.
D)level of total output that would be produced if capacity utilization is at its normal rate.
E)difference between actual GDP and potential GDP.

Question

Quizplus · Accepted Answer

The economy's output gap is defined as the difference between actual GDP and potential GDP. This represents the amount of unused economic resources in the economy, and can be used as a measure of economic underutilization or overutilization.

The Economy's Output Gap Is Defined as the